Right of a Pakistan National to buy property in India

On the 29th of September 2012, Adnan Sami, a well-known Pakistani singer who has sung for many Bollywood movies, albums and shows in India, approached Delhi High Court with a writ petition. He wants clearance to buy a property in Delhi, namely a flat in the DLF Capital Greens in the city. He wants the High Court to strike down a Reserve Bank of India circular that prohibits persons of certain nationalities, including Pakistanis, from buying immovable property in India without its prior permission.

In his petition, Sami has stated that he is residing continuously in India for the past 13 years and has even sung a song for the World Cup Cricket for the Indian Team. He pleads that being a professional artist and residing in India for such a long period of time, he should be eligible to buy a house for himself. His argument is that the Foreign Exchange Management Act of 1999 recognizes the rights of “person resident in India” and it is under this category that he claims he is eligible to purchase a property in India. According to Adnan Sami, the RBI circular is discriminatory as even after long residence, it requires a foreign citizen from certain countries (such as Pakistan) to seek permission from RBI for buying a property in India. He argues that this RBI circular is discriminatory as it prohibits nationals of some countries (such as Pakistan) from buying properties in India.

Let us now examine the claim made by Adnan Sami in his petition as to whether it is legally tenable.

Let us first find out what the RBI restriction is. I may point out that purchase or sale of an immovable property such as a residential flat is a capital account transaction. Under Section 6(2) of the Foreign Exchange Management Act, 1999, the RBI in consultation with the Central Government has the power to specify any class or classes of capital account transactions which are permissible. Section 6(3)(i) of this Act further empowers RBI to make regulations to prohibit, restrict or regulate acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by certain persons. Section 47(2)(a) of this Act gives power to RBI to make Regulations for this purpose. In accordance with these provisions, the RBI has made the Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000. Regulation 7 states as under:

“7. Prohibition on acquisition or transfer of immovable property in India by citizens of certain countries.- No person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan without prior permission of the Reserve Bank shall acquire or transfer immovable property in India, other than lease, not exceeding five years.”

Thus, according to this Regulation which has legal force in India, a citizen of Pakistan cannot purchase an immovable property in India without the prior permission of the RBI. This restriction is applicable to nationals of only a few countries as mentioned above.

It appears that Adnan Sami is challenging this Regulation made by RBI as being discriminatory against him as a citizen of Pakistan, and also because he is a “person resident in India”.

Let us now turn to the provisions of the Constitution. Article 14 of the Constitution of India provides that “The state shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.”

This right to equality is available to all persons, which include citizens of India and even foreigners. Therefore, all persons are required to be treated equally. But, does it mean that all persons shall be treated equally in all circumstances?

Let us take an example. ‘A’ an illiterate person says that he wants to practice as a surgeon. He files a writ petition in the High Court, under Article 14 stating that there is discrimination against him vis-à-vis a person who is having an M.B.B.S. or higher degree, and praying that he should also be given the right of practicing as a surgeon. He states that the authorities are wrong in not allowing him to practice as a surgeon as there is a right to equality given to him as a fundamental right under the Constitution of India and thus there should be there no discrimination against him vis-à-vis an MBBS-qualified person. Will ‘A’ succeed in his petition? Can he be permitted to practice as a surgeon?

It is obvious that ‘A’ cannot be permitted to practice as a surgeon because he is not professionally qualified and it is inappropriate to permit such a person to become a surgeon as he is likely to endanger the lives of people. Thus, in such a case, the Court will not force the right to equality between him and a qualified surgeon. Therefore, the authorities are justified in the so called ‘DISCRIMINATION’ in this case!

Thus, right to equality under Article 14 does not mean equality in all circumstances. In the case of Chiranjit Lal v. Union of India, (1950) S.C.R. 869, the Supreme Court held that the principle of right to equality does not take away from the state the power of classifying persons for legitimate purposes.

“Now it is well settled that though Article 14 is designed to prevent any person or class of persons from being singled out as a special subject for discriminatory legislation, it is not implied that every law must have universal application to all persons who are not by nature, attainment or circumstance, in the same position, and that by process of classification the State has power of determining who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject; but the classification, however, must be based on some real and substantial distinction bearing a just and reasonable relation to the objects sought to be attained and cannot be made arbitrarily and without any substantial basis.”

Thus, equal protection of the laws means that, “among equals, the law should be equal and equally administered, that like should be treated alike…”. In other words, it means that equal treatment should be given to the persons in equal circumstances. However, it is permissible to classify persons in different categories and treat them differently. But this classification of persons must be reasonable.

The Supreme Court observed, in the case of J.K. Industries Ltd. v. Chief Inspectors of Factories and Boilers, (1996) 6 SCC 282, that in order to be ‘reasonable’, a classification must not be arbitrary, but must be rational. The reasonableness of a provision depends upon the circumstances obtaining at a particular time and the urgency of the evil sought to be controlled.

In the case of State of West Bengal v. Anwar Ali, (1952) S.C.R. 289, the Supreme Court held that in order for a classification of persons to pass the test of validity under Article 14 of the Constitution, two conditions must be fulfilled, namely that:

(1) The classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others, and

(2) That differentia must have a rational relation to the object sought to be achieved by the Act.

This principle has been affirmed by the Supreme Court in many subsequent cases. It is not possible to exhaust the circumstances or criteria which may accord a reasonable basis for classification in all cases. It depends on the object of the legislation in view and whatever has a reasonable relation to the basis for the classification of the persons or things coming under the purview of the enactment. For example, in the case of Dhirendra Kumar v. Superintendent and Remembrancer of Legal Affairs, Govt. of W.B., AIR 1954 SC 424 : (1955) 1 SCR 2, the Supreme Court had observed that the basis of classification may be geographical.

Thus, a classification of persons on the basis of their geographical locations may be permissible under Article 14. Under the above Regulations made by the RBI under Foreign Exchange Management Act, the RBI has classified citizens of certain countries (namely, Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan) a class separate from citizens of other countries. The citizens of these countries cannot purchase any immovable property in India without the prior permission of the RBI. These countries are neighbouring countries or countries that have been having hostile relations with India. It is possible that citizens of these countries may easily infiltrate into India and stay here illegally. Citizens of a hostile country may not be permitted to purchase an immovable property in India for security purposes also.

I may also point out that Pakistan has been a hostile country to India since its independence. We have fought four wars with Pakistan. It is a well-known fact that the Government agencies of Pakistan are behind many of the terrorist strikes against India. Thus, it will be against the safety of India and its citizens if we allow all Pakistani citizens to own immovable properties in India, without even the requirement of a permission from RBI.

Therefore, there is nothing wrong if the RBI has prohibited the citizens of these countries from purchasing an immovable property in India without its permission. There is no complete ban, and these persons can still purchase property in India after taking RBI permission. Only restriction is that they cannot purchase property without prior permission of RBI. I feel that this cannot be termed discriminatory. This classification is a reasonable classification under Article 14.

I may also mention that Article 19(1)(e) of the Constitution of India provides that all citizens shall have the right to settle in any part of the territory of India. Thus, according to Article 19(1)(e), only a citizen has the right to settle in any part of India. Citizens of other countries do not have any such fundamental right, though they may also be permitted to settle in India in certain circumstances. In fact, I am a citizen of India, but even I am not permitted to buy a property in the state of Jammu and Kashmir. I may not even be allowed to visit certain areas of north-east India without obtaining a permit first. Am I not subjected to this DISCRIMINATION? If I, being a citizen of India, can be subjected to such discrimination, how can Mr. Adnan Sami, who is a citizen of Pakistan, say that he is being discriminated against?

If Adnan Sami is so keen in owning a property in Delhi, why doesn’t he just apply for a clearance by the RBI? The RBI may in fact permit him after verifying all details.

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